NEW YORK, Jan 23 (Reuters) - U.S. crude futures dropped 1.5percent on Wednesday in heavy trading after a key oil pipelinecut throughput, raising concerns inventories at the Midwestdelivery point for the contract might swell further.

As prices for international Brent crude held in positiveterritory following supportive economic data, U.S. crude plungedin afternoon trade after shippers received notification that thenewly expanded 400,000 barrel per day (bpd) Seaway pipeline hadcut rates to 175,000 bpd. It was not immediately clear when fullrates would be restored.

The line, which was restarted earlier this month after theexpansion was completed, ships crude from the Cushing, Oklahomadelivery point for the New York Mercantile Exchange's oilcontract to the U.S. Gulf Coast. The reduced throughput wasexpected to increase inventories at the hub, which had alreadyhit record levels earlier in the month.

Brent's premium to U.S. West Texas Intermediate crudewidened to near $17.50 a barrel - the highest level since Jan.15 - following the news. The spread had dipped below $15 abarrel last week following Seaway's start-up.

"Stocks at Cushing are already at record levels and traderswere betting that this line would help them draw, and narrow,the Brent-WTI spread," said Andy Lebow, vice president atJefferies Bache in New York.

"This could be very bearish WTI," he added.

Front-month U.S. crude oil futures settled down $1.45to $95.23 a barrel, snapping four straight sessions of gainswhich had pushed the contract above a reading of 70 on the14-day relative strength index, a level typically seen as anindication a commodity has been overbought.

Trading volumes were strong, with U.S. crude trade at nearlydouble the levels seen over the previous 30 days. Brent crudevolumes were up 60 percent over that level.

Brent found early support from data showing Britishunemployment fell for the 10th consecutive quarter at the end oflast year and that jobless claims hit their lowest level sincemid-2011 in December.

Investors were also awaiting weekly inventory data from theAmerican Petroleum Institute and the U.S. Energy InformationAdministration, delayed one day by the U.S. holiday on Monday,which was expected to show builds in crude and refined productinventories last week.

The American Petroleum Institute's (API) report is due at4:30 p.m. EST (2130 GMT) on Wednesday and the U.S. EnergyInformation Administration's report follows at 11 a.m. EST onThursday.

(Reporting by Matthew Robinson, Robert Gibbons and GabrielDebenedetti in New York, Ron Bousso and Simon Falush in Londonand Florence Tan and Seng Li Peng in Singapore; editing by PeterGalloway, Gunna Dickson, G Crosse)